Delta shows everyone with 3.6% operating margin and net loss

[FWAAA]

Completely astounding how Delta's strategy paid off in spades in the third quarter. Results include a stunning 3.6% operating margin and a net loss (excluding reorg and special items). Wow. Delta is clearly on the road to recovery. Simply amazing. Here's the press release:

http://biz.yahoo.com/pz/061109/108391.html

Now let's hear all the positive BS spin about how Delta has fixed all that ails it and will soon emerge from Ch 11 as the greatest airline on the face of the earth. 😀

 

[deltaflyboy]

Memo from Ed Bastian, CFO

Internal Memorandum

Date: November 9, 2006
To: Delta Employees
From: Ed Bastian, Executive Vice President & Chief Financial Officer
Subject: Ed talks about 3Q results


Earlier today, we announced Delta’s financial results for the September 2006 quarter. Those results show a net income of $52 million, which includes a $98 million non-cash gain from reorganization items. Excluding that gain, we incurred a net loss of $46 million for the quarter, a $392 million improvement over the same period last year.

While we certainly have more work ahead of us, it is important for everyone to recognize how much we’ve accomplished in our restructuring in such a short period of time. As you can see in this chart, for the first nine months of 2006, we have had a larger increase in operating income - nearly $1.4 billion - than anyone in the industry. This is even more impressive when you factor in the more than $800 million impact of higher fuel prices during that time.
(sorry chart wont copy over)

Turnarounds of this magnitude do not just happen - ours is a direct result of your dedication, determination and performance. While we were disappointed to post a small loss for the quarter, this result was within our expectations. This is not an indication that our plan is not working, it’s simply a reminder that more work remains to complete our transformation. We are on track with the expectations laid out in our plan and continue to be on track to emerge from Chapter 11 in the first half of next year.

We knew when we entered bankruptcy that we needed to fundamentally transform our company to improve both our unit revenues and unit costs, if we were to succeed in our demanding industry environment. So how are we doing against our goals? In the September 2006 quarter, we:

Achieved 85% of our plan’s $3 billion target as of September 30.
Increased consolidated PRASM (passenger revenue per available seat mile) nearly 13% year over year – and for the month of September, Delta’s PRASM on a length-of-haul adjusted basis was 92% of industry average, up from 84% at the same time last year, illustrating the progress we have made in closing the gap to industry standard.
Improved our mainline CASM (cost per available seat mile) excluding fuel by 4.8% year over year, achieving the lowest cost structure of the legacy carriers and continuing to close the gap to the low-cost carriers. Because of the volatility of fuel prices, maintaining these hard-earned lower cost levels will be more crucial than ever in our long term success. We must continue to be disciplined in managing our expenses, while never losing focus on providing great service to our customers.

There’s no question that these are demanding times at Delta. More than ever before, we must focus fully on the execution of Delta’s plan in order to emerge from bankruptcy next year as a profitable, competitive, stand-alone airline. Given the great work we have accomplished together, I am confident we will meet this challenge. Thank you for all that you do for our customers and for Delta each and every day.

Ed Bastian

 

[Fly]

Wow, looks like it's time for another employee paycut. Go Team!

 

[TechBoy]

What happened to the vaunted DL turnaround? Those legions of profitable new international routes? The profitable superhubs?

So UA and US are nicely profitable, yet DL can't quite make money. Hmmmmmm . . .

 

[NewHampshire Black Bears]

WORLD TRAVELER;

"Are YOU gonna' take that ANTI-DL talk Lying Down" ??

"Stand up and FIGHT like a MAN" !!

"Damn it, JUMP in there son" !!

NH/BB's

 

[WorldTraveler]

alright, here is my obligatory response.


Let’s not forget that DL was in the upper half of legacy airlines in the 2nd quarter. DL’s results were weaker than other network carriers this quarter but actually as good as or better than some of the LFCs that it directly competes with.

Since airlines outside of bankruptcy don’t report monthly results, there is no way to know whether DL’s results were worse or better than other carriers for September. September and January are typically the weakest months of the year for US airlines.

And while some of you wanted to see DL report results on par with the second quarter, remember that they have said they are only about 75% through with their network restructuring. And a lot of the routes that were started this year will continue to improve next year. Nonetheless, in spite of all the network reworking and int’l expansion, DL STILL reported RASM improvements as well as cost reductions as evidenced by a 10 point margin swing.

DL certainly has more work to be done but let’s also remember how sick they were just a year ago and how many people wrote them off completely. Ed Bastian and I do agree that DL's bankruptcy will still come down to being one of the most dramatic transformations in the history of the airline industry.